The government naturally wants to control. This reminds me of when there were constant attempts at taking away internet freedoms and it seems that the FCC managed to be in a position that they are comfortable with (for now). It was the same here in Europe, and I think they were less successful. But there are always more attempts...
With crpytos it's just the same. I talked with a person working in the banking industry the other day and he viewed (and so did his colleagues) bitcoin and other cryptos as being part of the dark web (which no doubt they are also used there). But he didn't understand the broader meaning of crpytos or why ultimately they can bring autonomy and wealth to individuals. The whole idea of not being in control of something is a foreign concept to them and should be therefore thwarted at every level.
As long as this is the most dominant opinion at the regulatory level, we are going to have a hard time. But I don't think it's a lost cause, as change can always take place.
You're right: we can still turn the tide. It's pretty obvious that change doesn't happen by itself. So, How can we prevent hard times?